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The post-closing trial balance will have fewer accounts than the adjusted trial balance.

Question 4 options:

	1) True
	2) False

Question 5 (0.5 points)

An expense account is closed with a credit to the expense account and a debit to the Income Summary account.

Question 5 options:

	1) True
	2) False

Question 6 (0.5 points)

Cash is a temporary account.

Question 6 options:

	1) True
	2) False

Question 7 (0.5 points)

Adjusting entries are often made because some business events are not recorded as they occur.

Question 7 options:

	1) True
	2) False

Question 8 (0.5 points)

Accounts receivable is a permanent account.

Question 8 options:

	1) True
	2) False

Question 9 (0.5 points)

An adjusted trial balance must be prepared before the adjusting entries can be recorded.

Question 9 options:

	1) True
	2) False

Question 10 (0.5 points)

The post-closing trial balance will contain only permanent—balance sheet—accounts.

Question 10 options:

	1) True
	2) False

Question 11 (0.5 points)

Adjusting entries are made to ensure that:

Question 11 options:

	1) expense are recognized in the period in which they are incurred.
	2) revenues are recorded in the period in which the performance obligation is satisfied.
	3) balance sheet and income statement accounts have correct balances at the end of an accounting period.
	4) All of these answer choices are correct.

Question 12 (0.5 points)

Which of the following is a true statement about closing the books of a corporation?

Question 12 options:

	1) Expenses are closed to the Expense Summary account.
	2) Only revenues are closed to the Income Summary account.
	3) Revenues and expenses are closed to the Income Summary account.
	4) Revenues, expenses, and the Dividends account are closed to the Income Summary account.

Question 13 (0.5 points)

Adjustments for unearned revenue:

Question 13 options:

	1) decrease liabilities and increase revenues.
	2) increase liabilities and increase revenues.
	3) increase assets and increase revenues.
	4) decrease revenues and decrease assets.

Question 14 (0.5 points)

The preparation of adjusting entries is:

Question 14 options:

	1) straightforward because the accounts that need adjustment will be out of balance.
	2) needed to ensure that the expense recognition principle is followed.
	3) only required for accounts that do not have a normal balance.
	4) optional when financial statements are prepared.

Question 15 (0.5 points)

Which of the following is not generally an accounting time period?

Question 15 options:

	1) A week.
	2) A month.
	3) A quarter.
	4) A year.

Question 16 (0.5 points)

Expenses are recognized when:

Question 16 options:

	1) they contribute to the production of revenue.
	2) they are paid.
	3) they are billed by the supplier.
	4) the invoice is received.

Question 17 (0.5 points)

Using accrual accounting, expenses are recorded and reported only:

Question 17 options:

	1) when they are incurred whether or not cash is paid.
	2) when they are incurred and paid at the same time.
	3) if they are paid before they are incurred.
	4) if they are paid after they are incurred.

Question 18 (0.5 points)

The expense recognition principle matches:

Question 18 options:

	1) customers with businesses.
	2) expenses with revenues.
	3) assets with liabilities.
	4) creditors with businesses.

Question 19 (0.5 points)

The difference between the balance of a plant asset account and the related accumulated depreciation account is termed:

Question 19 options:

	1) market value.
	2) contra asset.
	3) book value.
	4) liability.

Question 20 (0.5 points)

Accumulated Depreciation is a(n):

Question 20 options:

	1) expense account.
	2) stockholders’ equity account.
	3) liability account.
	4) contra asset account.

Answer 1

Answers

• #4
  TRUE.
  Post closing trial balance will have FEWER accounts than adjusted trial balance because adjusted trial balance contains BOTH permanent and temporary account balances. Post closing trial balance is prepared after temporary accounts are closed and only contains the balance of Permanent accounts.
• #5
  TRUE.
  Expense account have a normal DEBIT balance.
  Hence, in order to close them, expenses account is CREDITED, and Income summary is debited.
• #6
  FALSE.
  Cash account is a permanent ‘ASSET’ account. Its balance appears on Balance sheet and is not closed to any other account.
• #7
  TRUE.
  Events like insurance expired, supplies used etc are not recorded as they occur. Rather they are recorded through adjusting entries at the end of period.
• #8
  TRUE.
  Its balance appears on Balance sheet under Asset section and it is not closed to any other account.
• #9
  FALSE.
  Adjusted trial balance is prepared ONLY after the adjustment entries have been recorded and posted.
• #10
  TRUE.
  Post closing trial balance only contains PERMANENT account which appear on the final Balance sheet.